Demonstration of Compliance with Hong Kong Law Now A Must for U.S. Exporters to Hong Kong

The Commerce Department’s Bureau for Industry and Security (BIS) has issued a new rule that requires exporters to Hong Kong of items subject to certain controls under the Export Administration Regulations (EAR) to obtain either an import license or a written statement from the Hong Kong government as to why an import license is not required. The rule will be effective on April 19, 2017.

The new rule applies to items controlled for National Security (NS), missile technology (MT), nuclear nonproliferation (NP Column 1), and chemical or biological weapons (CB) reasons. If an item is controlled for one of these reasons and is being exported to Hong Kong, an exporter must demonstrate compliance with Hong Kong law, in addition to any U.S. requirements.

The goal of the new regulation is to ensure compliance with existing United States and Hong Kong law. United States authorities continue to be concerned about items transshipped from Hong Kong to other countries, particularly China. Thus, the reexport of any items from Hong Kong to another country must also comply with United States and Hong Kong law.

When a U.S. export license is needed from BIS, the exporter may apply for an export license from BIS before receiving any import authorization from Hong Kong. However, a U.S. exporter cannot actually ship a controlled item to Hong Kong until it receives either an import license from Hong Kong or a written statement from Hong Kong stating an import permit is not required.

U.S. exporters must add the Hong Kong documentation requirement to their compliance program requirements. Therefore, although neither U.S. nor Hong Kong licensing requirements are changing, companies will face additional compliance requirements for exports to and through Hong Kong to address transshipment risks.